Vietnamese exporters need to plan for FTA lawsuit liability

Update:
May, 20/2015 - 08:23

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"Imports could help Viet Nam have a lower cost of production, meet ROO requirements, and be part of the global and regional supply chain," Wong Chian Voen, consulting director of Mayer Brown Association of Singapore said. — Photo thuongmai

HCM CITY (VNS) — New free trade agreements (FTA) will help Vietnamese companies improve access to markets and diminish costs, but they will also require strategies and policies to minimise the probability of trade lawsuits, speakers said at a seminar on global trade late last week in HCM City.

Wong Chian Voen, consulting director of Mayer Brown Association of Singapore, said the World Trade Organisation had received a total of 446 FTAs (WTO) as of January 8 of this year, 259 of which are now in force.

However, Viet Nam is not making use of FTA opportunities due to the lack of awareness and understanding, narrow tariff margins, and high administrative and compliance costs, she said, adding that rules of origin (ROO) requirements are difficult to achieve for many companies.

"Imports could help Viet Nam have a lower cost of production, meet ROO requirements, and be part of the global and regional supply chain," she said.

Trade lawsuits

Vo Tan Thanh, vice president of the Viet Nam Chamber of Commerce and Industry (VCCI), said that Viet Nam, as a signatory to more FTAs, was experiencing more trade lawsuits and trade barrier actions, including anti-dumping, anti-subsidy, and guarantee measures.

Of the 80 lawsuits on steel, pangasius and shrimp exports, 47 involved US and EU antidumping actions.

American lawyer Matthew J. McConkey who represented Viet Nam exporters in both the pangasius and shrimp cases, said that FTAs had helped bring Viet Nam's goods to the world.

However, since Viet Nam is considered a non-market economy, the US disregards actual prices in Viet Nam and instead uses "factors of production" and surrogate values in trade lawsuits.

If production costs of other countries are higher than those in Viet Nam, anti-dumping duties could be imposed on Vietnamese goods.

According to, Pham Chau Giang, head of the Trade Remedies Investigation Division of the Viet Nam Competition Authority under Ministry of Industry and Trade, trade lawsuits take at least two or more years before a final decision is made.

"Viet Nam has faced 100 trade-remedy lawsuits, but only put up resistance to two safeguard cases related to floating glass (2009) and edible oil (2012), and an antidumping case related to cold-rolled stainless steel (2013)," she said.

"Enterprises have not resisted because they find it difficult to initiate a case."

If Viet Nam businesses applied strict requirements to their exports, the country could then build trade remedies which would force other countries to follow, she said.

But she questioned whether the country had enough modern testing machines to use technological remedies. — VNS